Skip to main content

tv   Bloomberg Markets  Bloomberg  January 15, 2018 7:00am-11:00am EST

7:00 am
they are the top stories we are coverage from the bloomberg and around the world the unloved dollar. the greenback falls for a fourth day trading at a four-month low. welcome to bloomberg markets. trading in the united states today because it is the public holiday martin luther king day which means we are broadcasting live from london today. the dollar weakness is the big theme of the morning. heading for its fourth day in negative territory and we have seen five weeks of weakness for the greenback. global growth weighing in.
7:01 am
amongst the dollar weakness euro strength and that means european stocks are finding it hard to make any headway. 6418 right now. we are at a more than two-year high. how will opec and friends respond? here's emma chandra. >> stocks fell more than 2% after a report that qatari fighter jack's -- jets intercepted an airline from uae. it's the latest escalation in the dispute between persian gulf monarchies. saudi arabia, the uae and egypt all accused of destabilizing the region. carillion has fired for liquidation -- filed for liquidation.
7:02 am
the shares have fallen more than 90% since july. it employs 43,000 people worldwide. it's a further boost to the international status of the chinese yuan. liquidation -- filed for liquidation. global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. i'm emma chandra. this is bloomberg. we will get a perspective on what's going on in the markets today despite the holiday in the united states. the dollar is really dominating the trading scene. its fourth day of declines with cable at its highest since brexit. the jump in the euro weighing on european stocks. let's speak to dani burger who joins us on set. dollar weakness one of the themes and not just sticking to fx. about holiday
7:03 am
malfunctions. the markets are closed in the u.s. and still we have a very u.s. centric story with the dollar approaching a four-month low. this is the fifth week of declines for the u.s. dollar and its impact is being felt across markets. take the sterling for example. easily sterling could have a very good case of saying we have the cable reaching its highest level since the brexit vote. this is spurred by optimism that we will have a soft brexit deal. you also important that want to take the pound and compare it to the euro for instance. year to date that exchange rate is very flat. you want to pull back on the sterling bulls and say a lot of the story has to do with the weakness in the dollar not necessarily the soft brexit. anna: how much of this is dollar weakness and how much strength elsewhere? what about euro strength?
7:04 am
that seems to be linking back to changing expectations around the ecb and the underlying growth story in politics. >> economists surveyed by bloomberg expect it to .7% rate of growth. it is certainly helping to push the euro higher. one thing i want to say with the dollar that i think is pretty interesting as we are seeing the weakness during pretty good times for the u.s. .rowth looks pretty strong by all accounts the central bank is going to raise rates three times. according to goldman sachs it's going to be four times. traders are focused on the hawkishness expected out of the .cb and boj three or four rate hikes this year in the u.s. there's no way that would have brought their
7:05 am
rate hikes to match that in the u.s. but still it is being dominated by those headlines and forhe u.s. we have tax cuts a short-term boost. the fear from overseas is really weighing on the dollar. anna: its a reassessment of relative central-bank policy. unit statesin the is not back. the global economy is also doing pretty well. say why do i want to hold the dollar when i can hold something a little bit riskier and still do ok. >> that is happening in stocks as well. this is the relative strength index of stocks. some people will argue whether you should watch these charts or not. overbought index is except european equities. if you are looking at oversaturated markets perhaps you move into european equities right now. global growth looks good and this is a market that is not overvalued right now. anna: it seems to me we spent
7:06 am
all of 2017 in europe talking about how european stocks where the thing to invest in because of the recovery gaining traction and yet there is still more to go on that one. thank you very much, dani burger. its sick manaken image. predictions for euro area growth have risen throughout 2017 this year. the ecb noted this sentiment and could be --ere stimulus policy this year. thank you for coming in to speak to us. we started talking about how despite the fact it's a public holiday in the u.s. dollar weakness seems to be the big thing. can see from we european stocks today. how much is euro strength and
7:07 am
issue for european corporate at this time of recovery across the eurozone? >> it is some sort of an issue. we all look at dollar weakness but it's actually euro strength and yuan strength as well. both of those currencies have really pushed the dollar down. the interesting point with european equities generally is that we see a real revival of domestic demand and that's the important story for europe. is not quite as dependent on exports as some people may think. it's an important point for germany but germany's at the risk of overheating so maybe that is welcome news for the ecb. anna: how close is the ecb to putting an end date on qe or changing market expectations. last week we got guidance on the guidance from ecb. that is really what has woken
7:08 am
up the markets. are we perhaps thinking of it wrong. are things accelerating. is europe doing so well that actually the ecb will have to stop and that's why those comments that they are going to continue is quite interesting. but they willing be very careful in their communication because the last thing they want to do is derail the currency in the bond market. anna: these comments from the german central-bank in the german financial establishment are typically on the more hawkish side. what about the periphery of europe. how much is that managing to keep up with germany that you say is close to overheating? still quite a lot of slack on the unemployment side. >> that's the really interesting story about europe. the northern europeans around germany were really strong. the problem was the periphery or the mediterranean companies and they are now coming back really
7:09 am
strong. and demand growth. we are seeing the biggest growth rates. europe is actually really accelerating. anna: where are the pockets of undervaluation we need to tap into? guests2017 we spoke to that said by into european equities. the recovery is gaining momentum. i am not a fan of banks in the longer run. there is a lot of value to be had from very undervalued financial sector that could really benefit from this upswing. for investors i would say just look at stock valuations across the board. europe is quite an interesting y compared to other areas. anna: does the banking sector in europe go higher or is the fact they've dealt with the loans
7:10 am
issue a little better. we have an italian election looming. lotf they come it does a better than the nonperforming loans become less and less because they are not nonperforming anymore. interest rates yields really going to hike up quickly, not really that quickly. the perspective will be there and all of a sudden the banks looks cheap. thank you, lothar mentel. he sticks with us. coming up, the political front in europe with brexit irrelevance in london and developments in germany as well. we will talk more about that. this is bloomberg. ♪
7:11 am
7:12 am
7:13 am
anna: live from london, i'm anna edwards. this is bloomberg markets. here's emma chandra. >> for the first time ever since publicly questioning the future of the superjumbo, the sales team lead says production of the plane was being shut down. if the company can't win a crucial order from emirates. emirates is the only airline with capacity to take enough a to keep the program alive. ford said it will double spending on electric vehicles. with the ceo jim hackett. >> we have to play to win and there are markets where if we are not winning and we aren't here to play than we should be exiting.
7:14 am
16 of ford's electric vehicles will be battery only models. the next few weeks will prove crucial in deciding whether rupert murdoch and 21st century fox will be able to buy sky. the u.k. watchdog will issue provisional findings on whether the takeover would give murdoch too much influence in the country. a final deadline is scheduled for the end of march. that's your bloomberg business flash. anna: theresa may's brexit bill returns to parliament this week and mps are moving the battle against the bill to the house of lords as the first signs of disagreement emerge about what kind of deal they should offer to the united kingdom. ross-thomas.n emma bring us up-to-date on what to expect this week in the comments. it looks as if those tory mps
7:15 am
could rebel and make life difficult for the prime minister and are not necessarily going to do that this week. >> those lawmakers made a big splash at the end of last year. they called for defeat of the government which was something they didn't undertake lightly. they felt strongly about the causes that were being debated. now the attention very much moves to the house of lords. an unelected house. convention says they don't tend to block legislation but there is an overwhelming majority for remain in house of lords and lots have come out and made it clear they could stand in the way. how that will play out remains to be seen. in the last instance what you are talking about is not a general election. it is hard to say whether it will come to that. at the very least we will be talking about constitutional crises. the lords have rebelled.
7:16 am
they made life difficult for david cameron over a couple of issues. democrats and lords than exist in the congress. the balance is different and much more remains oriented. at the very least they are going to have to tweak that legislation to get it through. this is really important legislation. it's a bill that is going to allow breaks it happen. transposing all the eu law on to book andstatute without it it's going to be very difficult to make brexit happen in an orderly fashion. mentelet's bring lothar back into the conversation to your thoughts when you watch the twists and turns in parliament. there could be a standoff. unseat sterling and u.k. assets that you hold?
7:17 am
>> it doesn't unseat them but it kind of is evidence for what the market has said for a while which is that we are not steering towards a hard brexit and indeed in the city the term fake brexit is making the round quite a bit. that we will get something that is called brexit but whether that is actually what the electorate initially thought it would be is a complete different matter. when you talk about whether we end up in another general election that becomes more of a talking point. clingsesa may who only to power because of her relationship with a small party in northern ireland the dup, the labour party has different stance on brexit. something a little softer perhaps. >> it's difficult to discern. --had corbyn this weekend there are plenty of lawmakers to commit toe him remain in the single market. he said over the weekend it was
7:18 am
impossible to remain in the single market. his brexit voters have a softer approach. we talked about general election. i'm not sure what the odds are. something we talked about at the end of last week was a second referendum. this weekend it was interesting a see nigel farage say that second referendum might be the only way and also boris johnson. worriedy saying he was about the fake brexit. anna: that's the reason that nigel farage suggests another is needed to currency doesn't like the with the negotiations are going this time around and wants to silence those. >> is that second referendum perhaps just a point not to have a general election and get corbyn in? a general election would have more material to upset the markets than the current fake
7:19 am
brexit discussion. anna: thank you very much, emma ross-thomas. quick word on german politics. that was very topical on friday. with marty mentioned the strengthen the euro we saw last week and that coalition building in germany. how much are you counting on that being more than an aspiration? >> it's more than 50% but it is markets seemed to suggest last friday because the membership still has to validate that move. last time they validated it the spd went from the second largest party in germany to winning just over 20%. this is like asking for a self-sacrificing act by those members of the spd. anna: jr. coalition partners don't always have a very good time of things in europe. the economic institution head was on bloomberg television
7:20 am
earlier saying he had serious doubt that spd members will back for more years in coalition. given the markets just seem to go along with that idea will we see a pullback in the euro? >> if it was just on that there is a risk because it will take a while for that to actually come through and i am not entirely sure that the leadership will actually get the membership behind its plans. anna: is that because there's son of spd policy in the agreement? the experience of the first round where they really seemed to suffer a lot a 20%re whittled down to party and they don't want to see that again. what they really should be telling the membership is if you got a 30 billion euro budget surplus just think what we can do with that. anna: what kind of german government do you get if you don't get thissurplus coalition? >> you would get another
7:21 am
and the electorate may actually be quite upset about that because they voted now it's the politicians turned. that's why the social democrats are trying to go down this road even though they really don't want to because they are feeling it is theirdo we end up with miy government? duty to make it work. anna: what broader implications are there for the eurozone and what we know so far about this german government stance about kris and other areas where european unity is tested? how much do we know about the german coalition stance? not that much change either way. even with the jamaica coalition you wouldn't have had that much of a change. german society is very much behind the european project. anna: thank you, lothar mentel. still ahead, carillion collapse. the construction group says it will take steps to end the compulsory liquidation. we will bring you the latest on
7:22 am
this story. this iconic u.k. business supplies many government projects. this is bloomberg. ♪
7:23 am
7:24 am
anna: this is bloomberg markets. i'm anna edwards in london. let's talk about a u.k. company making headlines. u.k. construction company carillion has filed for liquidation after failing to secure a last-minute government bailout. the company has been struggling with debt and shares have fallen more than 90% since july. the labour party has called on the public sector contracts to be brought back in-house.
7:25 am
laurent joins us now. what's the big problem with the sector? their problems with the u.k. market. carillion is a symptom of a market that is too fragmented. it's a low margin market relative to others and i think the government its to share some blame in this because it kept awarding contracts to carillion. i am not sure what they thought they were doing in terms of due diligence but there is too much focus on price rather than the actual quality of the market. anna: even one profit warnings are being issued by this business the government kept doing deals with them which is one of the things that will be investigated. you mentioned too much competition. how does that manifest? >> you can tell that price competition is good because it forosedly lowers the bill the taxpayer. if you don't also make sure the whole supply chain is strong
7:26 am
enough and good enough to actually deliver the project you get delays and possible bankruptcies and the cost come later. anna: the debt pile in the end was too big for the business. thank you very much, lionel laurent. just how big a development is this for the chinese currency? imf withad the considerable news around the .uan over recent years increasingly accepted in global trade. bring you that sound off coming up next. this is bloomberg. ♪
7:27 am
7:28 am
7:29 am
anna: live from bloomberg's
7:30 am
london headquarters, im anna edwards. this is a picture -- i am anna edwards. this is a picture across the european equity markets. equities endboards taken out of the boards -- and boards taken out of the picture stateside. healthy debate going on, this afternoon. price, 64.17. let's check in on the "first word news." emma: republicans still see the possibility of a deal allowing young undocumented immigrants to stay in the u.s.. theite president trump that deal is probably dead. -- president trump take a
7:31 am
statement that the deal is probably dead. federali, state and officials are investigating that false alarm about a missile attack. hawaiian residents were sent into a panic when a mobile alert said a ballistic missile was inbound and people should take shelter. hawaii's governor says a state employee pushed the wrong button. in jakarta, at least 70 people were injured when the floor of the indonesian stock exchange collapsed. police found no evidence that there was a bomb. biggest diamonds in history has been discovered in southern africa. the diamond is not hundred 10 carats, about10 the size of two golf balls. global news, 24 hours a day, powered by over 2700 journalists and analysts in over 120 countries.
7:32 am
this is bloomberg. germany's bank has decided to include the chinese yuan in its own reserve. a born member spoke to stephen engle at the asian financial forum in hong kong. i can only talk for our balance sheet. the middle of last year, we made the decision in the bundesbank to include the yuan. i cannot talk about the amount we are going to be investing or the technicalities, but we have been in touch with our colleagues from the people's bank of china. we have the ecb go first. that is the right way to do it. other central banks move before the ecb, that is also fine.
7:33 am
--thought this would be should be part of the german currency reserves. itis not a major amount, but is something we decided on and we want to be a part of. the fact that it is now included and the fact of the european central bank decided -- were both factors we talk about. stephen: through the imf review with the sdr inclusion, you hope we have similar concerns that the currency is not a free-flowing currency. it has restrictions. there are strict capital controls in china. do you share these concerns? >> we do. to payeless, we have part of our money to the imf, so we need accounts, we need to be able to the fill our obligations
7:34 am
as the fourth largest member of the international monetary fund. we have made that decision. it is a fact that we have decided to go forward. stephen: sometimes a journalist has to ask most obvious question. that is what -- that is why? >> it is part of the sdr and we have to the fill part of our quota and because of the ecb, also investing in some central banks in the eurozone. stephen: does it also represent the cloud that china does have -- clout that china does have? that you want to have this currency in -- >> as a central bank, you have a currency in your reserves to the extent you need it. it is not necessarily whether we do need it in order to fill our
7:35 am
obligations, but it is a matter of fact we want to have the accounts in this currency, that we want to understand the markets of government bonds. share the concerns the imf has. stephen: you said you had these negotiations the last six months. any clear indication that china is -- >> it can go further and it is their decision. it depends at how quickly they want to do this. they are internationalizing. there are obstacles. sometimes there are interventions. it is not 100% predictable. obstacles toe using it. in order to make it a more use international currency, more
7:36 am
needs to be done. it does not have a anchor the u.s.status, as dollar or the yuan or the euro does. stephen: the biggest obstacle would be restrictions they have and the capital controls. >> the international use is increasing because trade links with china will intensify. foreign ownership has been liberalized in china. now, you can own up to 51% of a financial institution. it a mores will make internationally used currency. >> is this a plan that is being put forward or is this starting as of now that bundesbank will start accumulating? stephen: i don't talk about timing and amounts but we made the decision quite some time ago
7:37 am
and we will execute on our plans when we see fit. was the bundesbank board member speaking to stephen engle in hong kong. your thoughts on the coming in from the cold of the chinese currency and as we said earlier, already included in the imf special drawing. why broader acceptance by global central banks? >> i think it is necessary for -- larger than the chinese at the moment, so they might be increasingly having some need to buy some just for that reason. anna: he was talking about the need to pay the imf.
7:38 am
in terms of the chinese growth story and a lot of the talk is about synchronized global growth and the chinese economy. , theo the trade risks spats with trump and the trade risk affect your view of china at the moment? chinese economy is one of the less resilient ones but the chinese leadership has -- -- we areecting experiencing a slight slowing in the background, but the chinese may whack against it. that worries me more than trump because trump still needs to stay alive with the china -- with the chinese as long as little rocket man is there. anna: the chinese do play that
7:39 am
whack-a-mole with potential asset bubbles, especially around commodities. we have seen oil prices going higher. brent going above $70. does this seem like a sustainable new high? do we just retreat back to where we were? retreatwe are likely to back to where we were. i can't say -- i can't see much of a change in the supply/demand balance at the moment. i think it may, with cold winter weather in the u.s., it is the fashionable trade at the moment. is that stronger growth story what is driving dollar weakness and the move into riskier assets as we start 2018? the potential of the global economy?
7:40 am
i think there is because it was a really bad year for the bears, last year. more and more, it is piling into the equity market. they are telling us that we are ending this low growth era or the interest rates will stay low for ever and we will have to make up our mind. anna: you take your pick which one of those arguments you go with. we appreciate your time. thank you for joining us, lothar mintel. -- lothar mentel. our interview with the chairman of forward, up next -- of forward -- ford, up next.
7:41 am
7:42 am
7:43 am
anna: live from london, i am anna edwards. talking about the auto sector, competition among electric vehicles continues to pick up. ford plans to more than double spending on electric cars. bloomberg's david westin caught up with the charm and -- with the chairman and asked about the benefits of autonomous technology. >> it is already happening. a lot of this technology, vehicles talking to other vehicles, talking to infrastructure. it is starting to happen. so a lot of the pieces of autonomy are going in, even as
7:44 am
we are sitting here. they are all about making vehicles safer and more pleasurable to be in. we're not going to just wake up one day and we will head a switch. it will be incremental, but we think the payback on this is going to be tremendous. i think it will change our business model and away we think is going to be amazing. david: the efficiency -- >> the profit per vehicle, we think to be really quite remarkable. the uptime will be higher. cadencebe replaced at a that may be quicker than current vehicles. we have our own projections of sales and they are all over the map. david: what about our emotional connection with the car? your family more than any other family is associated with this. it is the darling of america. we all remember our first car.
7:45 am
>> we won't have all av's. around,as you and i are the fun of owning a vehicle will still be there but we may not want to drive it everyday. if you live in a urban area, you might prefer to have a vehicle seamlessly take you to where you want to go, but even that the uncle, we are focused on how do we personalize that so that when you get in that av, it is your av and you have an experience were you think that was unexpected and cool. will a child born in 2018 have to learn how to drive in 2034? >> they might not have to. i love to drive, but not everybody does. david: we have to talk about nafta. a big negotiation coming up. you have talked to presidents in
7:46 am
the past. have you talked to the president to get a sense of nafta? >> i have not. to do something that drastic is not something we would support. nafta could be modernized. we could get some currency certainty. nafta has been in place for a while and has served this industry well. david: how bad would it hurt the ford motor company? >> i think it is the whole industry. our industry was built around nafta. it depends what you mean. there is a continuum here. a complete blowup and then a modernization, something we would not be opposed to. this whole industry was built around the notion of nafta and we have to be very careful with how much we tinker with it. david: go back to electric vehicles for a moment. what is going to happen to the oil industry?what are the
7:47 am
effects of this industry? >> clearly there are going to be affects. we have seen shifts in our industry. there have been tremendous shifts -- tremendous shifts over the years and my greatest hope is, greatest focus is making sure that ford is at the forefront of that. chairmant was the ford talking to david westin. joining us now from the north american now -- north american national auto show is david westin. great to have you with us on this day. you were talking there about autonomous vehicles and electrical vehicles. going all in an wrapping up the amount of investment they are doing in electric vehicles. theme that is a big
7:48 am
throughout this auto show is electric vehicles and autonomous vehicles. ford said they are going to go with $11 billion in investment. i asked how they will afford to pay for it and they said they can afford it out of current earnings. anna: a big investment in electric vehicles. the conversation you were having about whether young people will have to learn to drive in the future. this goes to the heart of the warning about the commoditization. which parts are going to be commoditized and which parts will still be able to be branded and demand a premium. it is clear to me from talking to the ford executives. be asaid it is going to bigger change than we understand right now, but it may come more slowly than we thought. a plan to own these vehicles is going to be transportation as a service in large urban areas and
7:49 am
we think they're going to be much more profitable per unit. anna: clearly a big talking point. in a sense from the other carmakers as to how they are trying to push their agenda with the u.s. government and whether the u.s. government is actually listening? that: the sense i get is that president trump has talked really tough but he may be backing off. there does not seem to be the same sense of urgency among carmakers this year as there was, last year. they seem a little more sanguine. that may not mean anything. it illustrates a basic point that even as they move into av's and ev's. a lot of talk around suvs, so still talking around those more traditional types of vehicles that have been selling well. amongst all of that, how do
7:50 am
european companies perform? bw -- gw has been looking for a like up -- vw has been looking for a leg up. david: as well as bmw. many of them have plants in the united states and in mexico and there is that supply chain problem which is very difficult for them. anna: thanks very much, david westin from the detroit north american motor show. he built wait -- he will be with us later on in the program. still ahead, the president returns to work. when lawmakers head back to washington, they will have to come up with a plan to avoid a government shutdown this friday. this is bloomberg. ♪
7:51 am
7:52 am
anna: live from london, i am
7:53 am
anna edwards. it is time for the bloomberg business flash. emma chandra has a look at some of the biggest news stories. emma: the chrysler ceo is counting on the jeep brand. he tells us the company can double profits within five years like linking -- by exploiting deep potential -- jeep's potential. he also says the u.s. tax cuts could boost profit by $1 billion per year. morgan stanley and goldman sachs are among the banks germany has selected for its initial public offering according to a person with knowledge of the matter. the chinese mark pocan has up -- smartphone maker has also chosen credit suisse. shares of softbank rose after the japanese company began considering an ipo for its mobile unit. an offering could bring in about $18 billion. the founder has been looking at
7:54 am
ways to unlock value and increase the company's share price. that is the bloomberg business flash. anna: thank you very much. joining us now as we look ahead to the week in washington, shannon pettypiece from mar-a-lago. let's talk about what is lying ahead. with martin luther king jr. day, not a lot of the usual monday things. shannon: it is hard to predict how one week is going to go, but a pretty quiet day with no public events scheduled. it is mlk day. the will be returning to washington this evening. one of the big topics in washington is going to be the government shutdown and whether democrats and republicans are going to be able to make a deal. shannon: what is the mix on that? we have seen the president
7:55 am
tweeting about daca and linking that to some of the spending priorities. is that something that has to be settled if we are going to break this by friday? emma: them up -- shannon: democrats certainly want it to be settled. to blame the democrats for an inability to get a deal on daca, saying they never wanted a deal in the first place. he did have dinner with kevin mccarthy, the house majority leader. that was one of the issues they were going to discuss. i don't think there is appetite in washington for a shutdown on either side of the aisle, certainly something the president said he would like to avoid. it is possible they could delay a decision on daca when the deadline that the administration set for this first group of dreamers to start getting deported comes.
7:56 am
anna: i know that washington will be transfixed over the latest racism allegations and trump's denial and rebuttal. also his medical. what details are we likely to get this way? shannon: tuesday should be interesting. the presidential position is going to give, we were described as a press briefing as will get a more detailed examination and he will take some questions from reporters. there was a brief statement put out on friday, saying he was in quote, excellent health. anna: we will look ahead to that. thank you so much, shannon pettypiece. nnon pettypiece.
7:57 am
7:58 am
7:59 am
londont is 1:00 p.m. in and 9:00 p.m. in hong kong. i am anna edwards and welcome to bloomberg markets. ♪
8:00 am
anna: welcome to the program. here are the top stories we are following around the world. the greenback falls for a fourth straight day, trading at a all month low. trucks, high-tech cars and rugged suvs. it might be a public holiday in the united states, so we are without a lot of the volume we normally inject into equity markets. a number of assets this morning. regaining a little bit of ground as you go through the session. one of the drivers for that weakness in european stocks has -- in the dollar stocks has been
8:01 am
a strength in the euro. the dollar losing ground as major currencies today, people questioning the boj, the ecb. we put the nymex price in here as well. a lot for opec to think about in terms of its strategy. let's get the "first word news" update. emma: -- failing to get the government bailout. the company has been struggling with debt and shares have fallen more than 90% since july. they currently employs 43 million people worldwide. thathere is a report fighter jets have intercepted a second commercial flight on its way to -- it is the latest in that escalation in tensions between persian gulf monarchies. they accused qatar of destabilizing the region.
8:02 am
president trump told reporters he is the least racist person they have ever interviewed. the president was in palm beach florida, reacting to fallout from the older comments about haiti and african countries. according to people to lay the matter, the government is targeting online platforms and mobile apps that offer exchange like services. china j.k. rowling clampdown has rocked global markets of bitcoin and other digital services -- digital currencies -- china's rolling clampdown as rock global markets of bitcoin and other digital currencies. global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. markets, the sliding dollar continues to be the biggest story. dani burger has more for us here in london. good to have you with us.
8:03 am
the dollar weakness despite the u.s. being out of action today, it does seem to be one of the biggest trends. the u.s. is off, the day that we are focusing on euro strength but on the euro side of the coin, we have the german government closer to building a coalition. near that 10 year high of 2.4% last year, there certainly is a lot that is pushing the euro higher and weighing on the dollar. on the flip side, there is a lot of bearishness building around the u.s. dollar. it is interesting because when you look at where we were last year, a completely different story and at this point, maybe now is when people step in to say this is oversold. there is growing pessimism around the u.s. deficit. one of the u.s. government is going to be able to reach an
8:04 am
agreement with the shutdown, to perhaps if we do see some sort of agreement reached in the government, there is so much bullishness, we could get a rebound in the dollar and we are seeing it continue to get beat down with continued weakness. in terms of what impact that is having on stock markets, in the earlier part of the day, it seems european stocks could not afford any headway because of that strength in the euro but it has leveled out a little bit. the ftse 100 is down by 1/10 of a percent. what has been driving the ftse, this morning? dani: one of the things that has been driving the euro higher is this really strong growth spree it when you think of where the growth is, it really is in cyclical stocks and when we think of the u.k. stock index, really heavy on defensive stock. another issue with that is short
8:05 am
dated government bonds, so two-year u.k. yield, touching a high and quite a few months since 2016 and that is because we see the ecb hiking rates, hawkishness from the boj. now we think i don't really need to get income from dividend yielding stock. i can turn to cash essentially and get higher yields from the u.k. two-year, so that part of the story of buying defensive dividend yielding stocks fading away and again, the u.k. market is dominated by stocks that are defensive and dividend yielding. anna: investors weighing the dividends they can get. thank you very much, dani burger, joining us with the latest on the stock markets this morning and broader assets. european stocks are falling in today's trading.
8:06 am
how much of this is due to the ecb hinting at a wine down and the strength we have seen in the euro? mostaque,g in emad cio at capricorn fund managers. you are looking at a weak dollar picture. of an assessment that we have around the dollar or is this a continuation of 2017? emad: it is a flight from safety. was the it is where everyone kept their cash. now you have a reversal because everyone has come up on a great year. almost every single asset class is up and people are looking at where can we get extra returns in the dollar is weakening on the back of that. it is about relative central-bank policy. the world does not
8:07 am
look so bad and so why wouldn't you go something riskier -- go for something riskier? emad: the u.s. is growing at almost record levels compared to the last five years. you would have to be very bearish to be negative u.s. growth. there aren't any cracks at the moment. anna: why not go to emerging markets or do you give some time to european stocks and japanese stocks? that is part of the central bank story, isn't it? about whether those central banks are going to be as loose with monetary policy as we think they are. boj headingb, the towards tapering. we have this lovely air pocket were there is a bit of upside. emerging-market stocks achieved $54 billion of inflows, last year. emerging-market debt, $67 billion.
8:08 am
i think that europe and japan are just take her and so they can absorb much more capacity. the internal story is europe was a absolute basket case as the ecb faces the crisis in 2011. we are on the other side of that and everyone is feeling positive. anna: it seems to me as if we spent 2017 having this conversation about european stocks, this could be there year because the growth story in europe and now we see that growth momentum really building and the ecb having to react to that. does that dilute some of the attractiveness? emad: if you look in britain, the pound is strengthening quite dramatically against the dollar. this is weighing on the ftse 100 because as well as all the factors that were mentioned, it does have a lot of pound hedges
8:09 am
affect. it reduces the eurozone's competitiveness as well. the dollar is becoming more competitive and this is where everyone wants to go because everyone is looking at how do we increase our industry but there is this lag effect that comes through. there is positive dennis for the eurozone. that could be setting us up for something very different in q2, q3. anna: thank you very much, emad mostaque with capricorn fund managers. coming up, brent driving -- trading at a all year high. this is bloomberg. ♪
8:10 am
8:11 am
8:12 am
anna: live from london, i am anna edwards. time for the bloomberg business flash with emma chandra. ever,for the first time -- the plane risks being shut down if the company cannot win a crucial order. >> i believe that we can find a solution with emirate and hopefully not in the distant future. we do need a strong base that only they can provide. emma: airbus wants them to order
8:13 am
380's to keep them in business for years. -- the company can double profits within five years by exploiting jeep's potential. says that u.s. tax cuts could be that boost profits by $1 billion per year. shares of softbank rose after jake -- after the japanese company said it was considering an ipo prints mobile unit. softbank's founder has been looking at ways to unlock value and boost the company share price. that is your bloomberg business flash. anna: emma chandra, thank you very much. despite elevated oil prices, opec is not changing course. producers are going to continue production cuts. lee anding in julian
8:14 am
emad mostaque is still with us as well. good to have you with us. let's talk about where you see the oil price heading because it seems opec would be wise not to be seduced by the higher oil prices. julian: i do. is very early days of oil at $70 a barrel and obviously a big run-up over the last couple of months. we have had a outage with the 40's pipeline system and that has had a impact out of proportion to its size because 40's is the key contributor to the print benchmark. what are the result is that we have had a lot of speculative money coming in to crude and brent in particular. as a result of that, we have seen this escalation in prices up to around $70 a barrel. anna: things like 40's that have
8:15 am
drawn in that speculative money and not the underlying supply and demand picture that has pushed rent above 70. emad: they start -- brent about 70. julian: still robust demand growth. that is being impacted partly by very cold winter weather over the latter part of 2017. the first week or so of 2018, that is undoubtedly having an impact. the question going forward is going to be will that strong demand persist and the view increasingly is that for the back end of the first quarter and into the second, it is likely to weaken significantly and this is one of the reasons we are seeing so many opec members who in the past have been renowned for their -- on output quotas now saying we need to take stock. anna: let's bring in another
8:16 am
voice. -- spoke over the weekend and talked about where he thinks energy markets are heading in were the oil market is going to go in the wake of that move to $70. next few months, and we will see more like blast markets. global demand is going to increase. reduction isoil coming from the united states, and put aa and canada lot of oil in the market, so it is important to expect the market to come unless we have some surprises. unless we have some
8:17 am
surprises. what are your thoughts? emad: i have been bullish on oil for quite a while now and i think the market is reassessing what the future holds. at the market is holding towards, it is balanced right now. aboutt question marks their capacity when you see qatar. what is happening in places like nigeria and liberia? one shock could move the market higher. the speculative length is very long at the moment. anna: what does that mean? julian: it is the highest it has -- emad: it is the highest it has ever been. it leaves a little bit of air pocket for short-term pullback. anna: but you are bullish. the qatar story about the scrambling of the jets.
8:18 am
that theomething geopolitical risk looks as if they could move prices higher? qatar and the uae, there is a wealth of supply. there is no spare capacity in the markets at the moment apart from the opec cuts. the market cannot adjust. i think the market is very fragile at the moment in both directions. expecting $70 or above, this year. anna: maybe that will be good in the united states. this chart is on the bloomberg. just underlining the way we have seen -- go up in the united states. what kind of response to we get
8:19 am
from those shale drillers? julian: part of what we saw in last week's figures was a big jump in u.s. oil. part of that is a correction of what we saw before was a second -- which was a significant drop. this cold weather across the northern part of the u.s. i don't think we can read too much into the size of the jump that we saw in last week's data. anna: are we in the oil price range that really starts to retract? julian: absolutely. we were in that range when oil went above $60. brent is now at $70 which is a more meaningful benchmark as far as u.s. shield drillers are concerned. pulling more drilling back into the market. there are bottlenecks.
8:20 am
this is not something that can grow. there are bottlenecks in terms of the availability of fracking crews. there is availability constraints in the amount of oil that you can move out of the shale basins. probably concerns in the -- constraints in the availability of drivers to move that to well sites. we're going to start seeing those aggressive level of prices and that is boosting the expectations for u.s. production and shale production this year. if you look at the numbers that came out of the department of energy in their forecast earlier, this month, they have increased their average byduction forecast 2018 260,000 barrels a day. changing in five weeks. anna: things are moving quickly.
8:21 am
it is. these constraints, they are not really constraints that need a technological solution. the technology is well-known. some more truck drivers and things like that. the solution is there, but is the money right? anna: going to need a bigger truck. julian lee, bloomberg fly columnist, thank you so much. mostaque, capricorn fund managers cio is staying with us. onwill bring you the latest a transatlantic rivalry. ♪
8:22 am
8:23 am
8:24 am
anna: this is bloomberg markets. welcome back to the program. in the battle with boeing, airbus takes off. they outsold their arrival in 2017. it was a record year for the company which included its biggest deal ever. joining us with that headline and more -- let's start with a positive story for the european navigation sector. airbus outsold boeing in 2017. it's largest order. -- its largest order. >> it was in dubai, we were not expecting anything. this order forh 50 planes, that led to the biggest order intake in september. the orders today, this is not a new thing for airbus to outdoor -- doubt do boeing. -- to outdo billing.
8:25 am
-- boeing. the question is delivery. anna: turning those orders into something. >> when you can actually bring them to market and deliver them to customers. that is when it comes down to wreaking down who is the biggest playmaker. coo ofned today from the the commercial aerospace, that he thinks they can overtake boeing by 2020. we might hold them to that. anna: that is their target. how much does it depend on the -- program? what do they think the future is? for forhas been indoor a few years. since dubai, that same airshow really announced the biggest order ever, they also failed to secure from emerson. -- emirates.
8:26 am
emirates cannot sell them and they really require emirates as the backstop to order a sufficient number. what they said today is that they could potentially close if emirates does not pull through. anna: we remember that high level of theater when that deal was a deal and then it was not a deal. and fascinating conversation. thank you for joining us. still ahead, we head to detroit for the north american international auto show. our interview with the president of cadillac. a lot of big things coming out of that show. autonomous driving, electric vehicles. what does the cadillac boss have to say about that? this is bloomberg.
8:27 am
8:28 am
8:29 am
bloomberg from headquarters in london i'm anna , edwards. this is "bloomber markets." the european trading day,
8:30 am
without the volume from the united states, bonds not trading and its mother the value is gone. downve the stoxx europe 2/10 of a percent. some weakness as a result in the strength of the euro. dollar weakness is a big story today, down 6/10 on the index. and the dollar is weak against most peers. barrel at the end of last week for brent. here is emma chandra. emma: in washington, republicans see the possibility of a deal allowing daca immigrants to stay in the u.s., despite the common from president trump of the effort is dead. the immigration issue is playing out as part of a bigger debate on spending, congress has to pass a bill by friday or face a government shutdown. areawaii, federal officials
8:31 am
investigating the false alarm about a missile attack. the hawaiian a residents sent independent going to mobile alert said a ballistic missile was inbound in people should take shelter. the hawaiian governor said a state employee pushed the wrong button. in jakarta, at least 72 people injured when a floor at the stock exchange collapsed at lunchtime. police searched and found no evidence that there was a bomb. the stock exchange started afternoon trading at the usual time. one of the biggest diamonds in history has been discovered in southern africa. about the sizes, of two golf balls. it was found in a mine and 813 2015 dimon discovered in sold for a record $63 million. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm emma chandra. this is bloomberg. anna: thank you.
8:32 am
the size of two golf balls, that will never fit on my finger. bloomberg news is live all day, the north american auto show is taking place in michigan and i will hand things over to david westin who is standing by with the president of cadillac. david: thank you so much, we are here with johan de nysschen, the president of cadillac, good to have you. >> thank you. david: a lot to talk about, but let's start in china because you have quite a story in china, i think that you are even surprised. ago onad embarked years a very audacious plan for china, to set it up as a second volume of for the brand, and we are already celebrating success. we have rocketed into the number four spot and i propose it helped a little bit by avoiding the chinese luxury -- as opposed the u.s.. david: you said it would take 10 years, but now much less.
8:33 am
>> we beat it by two years. david: you are telling -- you are selling more cadillac in china compared to the united states? >> it has surpassed the united states performance. this is a phenomenon that i think is encoded by a luxury brands, the chinese is the largest market. david: how big could this get for cadillac in china? >> we will probably do over 200,000 vehicles this year and i think that when we roll out our new product portfolio, which will drive a lot of growth domestically in the u.s. as well, we should continue to see acceleration in sales, but we have performed well in other markets besides china and those markets grew by 10% last year and in conjunction with a robust u.s. performance, on the financial side, 2017 really was a good year for cadillac, messick the highest year in terms of -- the second highest
8:34 am
in terms of sales for the brand. david: that pace of growth in china is remarkable, the projection of over 200,000. where is it coming from, is a larger market or are you taking it from people, because i think buick has been your main brand in china, going back to the last emperor. >> buick is one of the largest brands in the chinese market overall, but obviously there is clear stratification between cadillac and other products, and obviously pricing. it is a different customer and our growth is coming from a degree of buoyancy from the market, but there is market share growth, so we are taking it from other companies as well. david: coming back to the u.s. for a moment, you have a plan that is not so much growing the overall size, but more improving the brand and profitability. what about next year in terms of sedans and suvs? >> it has been a challenge for the u.s. markets.
8:35 am
cadillac has always had a sedans, and we have one crossover into one suv in a market that has gone retro to crossoversdans and our new product will allow us to capitalize on the demand in the crossover section, but it has been tough business for all brands. david: as i understand, you are planning on announcing a new crossover model in the u.s., when will it come out? q4 will be the beginning of the largest part -- in the history of the brand. we will be rolling out a new vehicle literally every six months until 2021. and once that is complete, it will give us a balanced portfolio between the sedans and crossovers and suvs. david: so you will have more suvs and fewer sedans? you have four models right now, is that too many?
8:36 am
>> i think that we will be rebalancing our product portfolio, even with sedans, where we have cars closely positioned to each other, so we will have a larger separation and probably cover the spectrum on the sedan market for reentry. david: talk about one of the main themes in detroit this week, that is autonomous vehicles and electric vehicles. you have something called super cruise, which relies on artificial intelligence. can you explain how it fits in strategy. we had dan hammond on last friday talking about the bolt, is years of separate from that? -- strategy. yours separate from that? >> we want to draw on the expertise of our parents company. cadillac will be the spirit of the enterprise, but cadillac is about personal economy, so that is the real luxury of choice. when you feel like a driving you
8:37 am
can enjoy an exhilarating driving benefit that we have put into the car, but if you want the car to do the job for you you can sit back and relax. the avenue for full autonomous capability is explored by different enterprises and will focus on the idea of commercial application, ridesharing systems, and this kind of use case for a tommy. -- economy. david: safety is an issue. we spoke with elaine chao about this. ironically, as we add more technology to vehicles, the number of traffic brutalities is not going to come in fact in recent years it has gone up -- is not going down, in fact it has gone up. why is that? >> if you look at in apples to apples comparison basis, vehicles have become more -- so advances in a thomas driving and -- in autonomous driving, if you
8:38 am
look at computers and artificial intelligence, they are able to interpret and respond in danger situations for more quickly than humans can. we think that those capabilities will probably represent the single largest advance in road safety that the industry hasn't seen. that has seen. david: a child born today, will that child need to learn to drive? >> it is conceivable that the answer would be no. david: thank you very much. johan de nysschen, head of cattle it. anna: -- cadillac. anna: fascinating question on whether young people will i need tiller to drive. david westin at the auto show. coming up, spurring economic growth in london and beyond. we will hear from a finance minister coming up next.
8:39 am
this is bloomberg. ♪
8:40 am
8:41 am
live from london i'm anna , edwards. this is "bloomber markets." business leaders gather to exchange views on how to embrace technology, spur economic growth, and pierre gramegna sat down on the sidelines of the asian forum to speak about opportunities in new areas like tech currencies. >> it is key if we want to
8:42 am
finance the initiative, and as you know luxembourg is the second-largest center in the world for investment funds with 400 500 billion euros dollars under management, so with that vehicle you can find a lot of things and on top of that europe is backed with 2% growth, so i think it is a very good time to connect china with europe. >> how about cryptocurrencies? bitcoin is in the news a lot, so to zero up have plans to add -= too does europe have plans do anything? >> obviously, virtual currencies are there to stay. they bring added services, they are convenient, they are simple, it is so consumers love them. i think the regulators in the countries will have to monitor
8:43 am
it and regulate it to a certain extent, certainly more than what is the case now. the dangers of money laundering are known and there are other issues at stake. europe would probably handle it together because of this need, something that touches upon the european single market, so it has to be done at the european level. >> i did a cardinal sin, i bury the lead, we really want to talk about brexit. andnegotiations are tense there also seems to be a breaking consensus, whether it is the dutch, the spaniards, saying let's be more pragmatic. let's go for a soft brexit. what does the u.k. have to do for the banks to regain access to the single market? >> i think the whole situation in a way is dramatized excessively bid >> you -- excessively. >> you think that is hindering it? >> it is never good. we need to look at things as
8:44 am
they are. what have we seen in the last 18 months is that the players in the financial services, they are based in london and they need to have substance in the single market, because they will lose automatic, general access. everybody realizes that now. when i talked to china months ago, that question was open in many people's minds, that the u.k. could have cake and eat it. everybody realizes this is not possible. but by setting up subsidiaries, like a luxembourg, say in the last 12 months, and adding real substance, you can solve the equation. anna: that was pierre gramegna speaking in hong kong. they covered a lot of ground, cryptocurrencies and brexit. emad mostaque.s on the subject, spoken a lot
8:45 am
about in the past, you have been evangelical on cryptocurrencies, but now you have sold, why? >> i saw the loss of my holdings in december's, it was from a simple story, the bitcoin value and everybody getting in. the mania has exploded everywhere and it's all coins which have no value at all suddenly at $20 billion market caps. so there is a bill of the top. see yourself moving on in cryptocurrency? or in blockchain? >> we look for transformative stories and that is what we see with the blockchain and cryptocurrency space, the real returns are not at the top end of the market anymore. they are impact glass locations of blockchain's -- practical applications of blockchain. that is at the early stage, because the zero be the use of practical use of blockchain,
8:46 am
even as the bubble deflates because there is too much a speculative money, in terms of people pumping and dumping. anna: very serious practitioners are starting to take this seriously and work out what blockchain could mean for their particular industry. at the same time, we have on the cryptocurrency, the headline grabbing things, many places like asia clamping down on speculation in cryptocurrencies, or in the years, or the trading of cryptocurrencies. how big is that regulatory threat? >> most of them are not censor -able. if you are trading in the korean won, that is where the government can get you. are trading at a 40% premium compared to anywhere else in the world, so there is a massive amount of getting away the controls, things going on like that. the government cannot sustain that because of money sovereignty. anna: will the government's put
8:47 am
up with that? you mentioned the lack of control outside of the systems, is there anything that he they can do to adjust that? >> they can track who are doing it. anna: it without a change for real-world currencies you think the value will go away? >> it diminishes, because it has speculative future value, but there will be regulated exchanges. the first petrodollar in venezue la. you will see regulations decreasing on the one side, but regulated activity increasing on the other side. anna: away from the subject around cryptocurrencies, let's get a brother -- a broader look at the markets. as you look ahead, what kind of performance do you expect from global equities? >> i think i'm very bullish on equities, we see a lot of short-term danger because the markets have done so well. there is a last gasp as you go through the targets. so you are at record levels on
8:48 am
the s&p, emerging markets without a 5% or 10% correction. there is only so far the yield can go up and it makes it difficult for allocators have to hit 7.5%. i believe there will be continued rotation into risk assets and that is positive for re-rating, when augmented by the story of global sigrid as growth. -- secret eyes growth. anna: when they are looking for the yields, from what we've seen over the last few weeks with the yield going higher, we are pulling this chart up on the bloomberg. this is the market value of global bonds with negative yields falling by $1 trillion, so we see the move higher in yields. the bank of negative yielding debt if you like, is a shrinking. that has to be good news for that group of people looking for that high-yield. >> everybody cannot participate in the higher yields. we're not talking about much.
8:49 am
but you have a short duration of the moment because if you are holding long-duration bonds it is not a pretty story in the principal value. however, there is only so far you can go up, because you will not have more than 75 basis points in the rate hikes this year in the u.s. this is not much built a, so you'll see these max out. inflation will only go so high given the current structure, unless we see higher global growth. anna: you do not think we will get for hikes from the fed -- four hikes from the fed? >> i am in the three rate hike camp. i think we will see more growth from here. but this is a very narrow range, especially if the mandate is 7.5% return. anna: thank you very much. good to get you on the program this morning. emad mostaque. still ahead, the u.s. president returns to washington dc today after a three-day weekend at his
8:50 am
mar-a-lago estate. we will take a look at the agenda this week as we build toward a shutdown on friday. this is bloomberg. ♪
8:51 am
8:52 am
anna: live from bloomberg headquarters in london, i'm anna edwards. this is "bloomber markets." here is an shot of london. time for bloomberg business flash. here is a much andra. -- and much andra. emma: ford says it is all in on electric cars at the detroit auto show, saying that they
8:53 am
would double spending on electrified vehicles. shell outy plans to $11 billion, bringing the models the market by 2022. the next few weeks will prove crucial in deciding whether rupert murdoch's 21st century fox will be able to buy skye. the u.k. merger watchdog is had to issue provisional findings this week on whether the takeover will give rupert murdoch too much influence in the country. the final deadline is scheduled for march. morgan stanley and goldman sachs among the banks xiaomi has enacted for the public offering. according to a person with knowledge of the matter, the chinese smartphone maker has chosen deutsche bank to work on the ipo. no word yet on shares will be lifted. and that is your bloomberg business flash. anna: thank you very much. funding running out for the federal government on friday, giving lawmakers only for legislative days to avoid a government shutdown. for more ahead this week, we go
8:54 am
to washington -- we go on the phone with our reporter, tracking the weekend movement of the president. shannon, talk about the potential for shutdown. we have seen this before. they can has been kicked forward. is it too early to speculate whether it will happen again on friday or ahead of friday? --well, there is certainly [indiscernible] we are struggling to get shannon on the phone it seems. trying to reestablish contact with her. talking about what we are looking ahead for the united states, the legislative agenda will no doubt be working toward avoiding a government shutdown. legislation could be something that is material in there, we'll also get data on wednesday. thursday thaton
8:55 am
will be interesting in the mix. we are showing you the currency markets, because some have really been on the move today. dollar weakness has been part of the story, whether the euro strength or the yen strength, one question we have been talking about this morning. dollar weakness at the start of the year. it was a big story in 2017. we have seen five weeks of dollar weakness and reassessment in global growth and whether you want to hang onto dollars in the environment, or whether you want to take something with a higher risk profile. the ecb and was central banks will do will be fascinated, something that investors are doing. here is a look across the other markets. the equity market in europe starting very much on the back foot, to some extent weighted down by the strengthen the euro. in a2/10 of a percent lighter than normal volume day typically, because we are
8:56 am
without the united states, martin luther king day in the u.s. we saw some weakness coming through. connection being made by the markets. resilience in the oil price, brent going over $70 a barrel. and going up and count in the u.s. how the grouping will react to the higher price of late. coming up later, we will talk to achieve strategist, get his thoughts on the weakness in the dollar into strength we see elsewhere. picking up where we left off in 2017. this is bloomberg. ♪
8:57 am
8:58 am
8:59 am
anna: 2:00 p.m. in london, not a clock a.m. in new york -- 9:00 a.m. in new york live from , bloomberg headquarters in london, i'm anna edwards. welcome to "bloomberg markets."
9:00 am
♪ anna: welcome to the program, here are the top stories we are covering for you from around the world. the dollar falling for a fourth day, trading at a form of love. -- low. trading at gains, its highest in more than three years. and high-tech cars and suvs are the world biggest -- as the world biggest automakers gather in detroit to reveal their latest products. thisck look at the market, monday we are without the united states, martin luther king day, no equity trading and no bond trading. we are without that volume and we are struggling a little bit to make any higher in the european equity session. down by an eighth of a percent. talking about the dollar weakness. we are up again at 64.42 for the
9:01 am
nymex. and oil prices higher. and coming out of detroit, the north american auto show, the bmw headline coming across right now, expecting a global sales growth in 2018 on new models. they are expecting 2018 growth in all markets, including the united states and china, keeping an eye on the bmw share price. and we will be back with david westin who is at the event. now first word news. emma? emma: there is a rapport the qatari fighter jets have accepted a flight. the latest escalation in the feud between the persian gulf monarchies, saudi arabia, the uae, and egypt cutting qatar in june, accusing them of destabilizing the region. qatar denies it. in the ok, filing for liquidation fromcarillion. the company has been struggling
9:02 am
with that and it shares have a fallen since july. the input 40,000 people worldwide and work on projects ranging from hospitals to high-speed rail lines. in hawaii, federal officials investigating the false alarm about a missile attack. hawaiian residents were sent into a panic when a mobile alert send a ballistic missile was inbound and people should take shelter. the governor said a state employee pushed to the run button. president trump -- wrong button. president trump says he does not believe democrats want to make a deal on those young immigrants facing deportation credit they have been pushing to get an agreement on the dreamers in a bill that is needed to avoid a government shutdown, but in exchange the president wants to build a wall on the mexican border. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm emma chandra. this is bloomberg. thank you.
9:03 am
the slidingarkets, dollar is the biggest story of the morning session and into the afternoon, with cable on the move and that is highest since the brexit referendum. we are joined by a reporter on the latest. the weakness in the dollar. >> absolutely, we have two very different stories of the dollar weakness and the euro strength. the euro trading at highest since 2014, the dollar tumbling even more, so two different stories. where is this coming from? dani: we have some hawkishness from the ecb, from the boj, but at the same time the u.s. central bank is forecast to raise rates three times, if you believe goldman sachs it will be four times, so much more hawkish than we will probably see at of the ecb, so perhaps not a story about interest rates. maybe instead it is about the
9:04 am
delta of moves, where the economy is coming from. we are approaching the second longest recovery we have had in the u.s. in modern economy, meanwhile in europe we are getting into the momentum of that recovery. so perhaps that is helping to push the euro stronger right now and again in the u.s. we have talks of whether we will avert a government shutdown or not. so maybe that is weakening the dollar paid anna: stock market -- dollar. anna: stock market performance, we have seen german automakers suffering. how is this falling out across the u.s. equity market? dani: it is the euro really hurting the company's, making it more difficult to push higher, but at the same time we have a lot of optimism around growth, around earnings and company growth, so there is a chance perhaps it may not last. however, there is a lot of bullishness on the euro right now.
9:05 am
if we look at the data, the hedge funds and other large speculators are the most bullish on the euro on record, so that is really going to weigh on the stocks, especially in the u k where you have a very defensive equity market that will not do as well with the cyclical growth coming in. anna: thank you for joining us, dani with the latest on the markets. and the dollar is on a downward streak, one of the major stories of 2017 was the weakening greenback, so why is it so unloved? joining us now is kit juckes, global head of fx strategy at societe generale. we will get your thoughts. start with the weakness in the dollar, quite a sizable move today. kit: and of their of several parts to it, some of them make sense and is some do not. i think the fatigue as we have had the strong dollar coming in, the strong data coming in, and i
9:06 am
am pretty clear my mind that we have not really moved out of the range, we have not shifted expectations on where the fed is ending up, we are debating how fast they look at the peak rate for 2.5%. there are a couple other things that have come through in the last few days. one is the sense, and joe weisenthal wrote a tweet on it. anna: our bloomberg colleague. kit: saying if you want the dollar in times when you're worried on everything, why would you want it when everything is good? also, two things that have happened in the past week to support the euro and the yen. the ecb is already indicating that they might be thinking about ending their bond purchases earlier, perhaps sending new signals. that got everybody excited. anna: guidance on the guidance. kit: we did it last june, when mario draghi spoke at the central conference, the euro took off.
9:07 am
and they calmed the bond markets back down and failed to calm down the euro. same thing in japan, where there could be a tiny deduction in bond buying got everybody excited. hang on a second, what if the bank of japan starts getting closer to an exit from their policies. anna: despite with a central banks say on occasion, do you get the sense that the markets, that they investors are positioned to jump on signs that the central banks will unwind stimulus, because every time we get the hands the market goes - - hints the market goes with that. kit: my fear is the minute they actually signal a change we will be at 100. before i get time to speak to you about it. it will be quick. if the ten-year note yields continue to go in this, let's call them to 30 having to 60 range, if we go around there --
9:08 am
230-260 range, if we go around there, -- if they just go nowhere, we are either messing around in this range with everybody saying we like a short yen, or we go to 100 really quickly. i have which one scares me. anna: you do not want to miss that move. in terms of where we go at the inflation story into the underrate story in the united states, you do not think the inflation story will push rates higher? what do you think about china rumbling last week about what the appetite is for treasuries, none of that will stick to the treasury market then and move the rate higher? substantially. kit: i do not think we look at above 3, which will be 1%, which is the level we reached at the beginning in 2013, when we had that panic. we have defined a range since then, whether the fed will go four times this year, they will end up with 2.5%, 2.25%, but if
9:09 am
that is all it is, it is not such a big deal. anna: what changes that, what is outlook that we do not go above 3%? kit: inflation more than anything else, the idea that the fed will normalize toward a lower than historically true neutral interest-rate level, that actually everything has changed and now they find the phillips curve on a shelf and we discover -- anna: missing in action. kit: and prices are pushing up on the fed in traditional fashion finance off behind the curve. the alternative is rather than saying i am at the back end of the economic cycle, we have got some good growth because of the fiscal policy this year, but everybody is penciling in 2020 for a recession, trying to guess
9:10 am
when a slowdown comes. 3% this it will be year, 3% the year after that, and everything will change. anna: is there a risk the tax plan become something that will overheat the u.s. economy? kit: there is a risk because the consensus is there is strong growth this year, but not more. i do not think that is likely. i think a decent year. in terms of employment growth slowing pretty much every month. anna: thank you very much. you will stay with us. coming up, angela merkel's battle to end gridlock. her attempts to build a coalition government. will the membership go along with the idea? that is next. this is bloomberg. ♪
9:11 am
9:12 am
9:13 am
anna: live from london. i'm anna edwards. this is "bloomberg markets." we go to new york and emma chandra. emma: for the first time ever, questioning the future of the superjumbo from airbus. john leahy says they risk being shut down if the company cannot win a crucial order from emirates. he says emirates is the only airline with enough capacity to take enough a380's to keep the program alive. ford all in on electric cars, saying they will double spending on electric vehicles. the committee plans to shell out $11 billion, bringing 40 models the market by 2042. and sure as of softbank rising after their considering an ipo of the mobile phone unit. an offering to bring about $80 billion. the softbank founder has been looking at ways to unlock the value and boost the company
9:14 am
share price. that is your bloomberg business flash. anna: thank you very much. the euro has been gaining momentum in part because angela merkel and the german social democrats have taken a step toward forming a new coalition. all of that news developing over the weekend. for the latest, we will go to patrick donahue, who is a government reported in berlin and joins us. good to have you. in terms of the latest, how are things developing over the weekend, because on friday there was optimism about the ability of the german government to come together, a coalition to come together, but now we are reliant on the approval within the spd for this to go ahead. what are you hearing? patrick: friday was a big breakthrough, because you had angela merkel's block and social democrats finally come down to a preliminary agreement on setting up a new government, but we did
9:15 am
see pushback over the weekend among the social democrats in germany, many of his rank and file are not happy with the flagship social democratic policies, that they could not be found in the agreement. a lot of people wanted to see an extension of public health insurance to all german's, higher wealth tax, and none of that is there so it will be difficult, possibly difficult for the social democrats to support the need to agree the party conference this coming sunday on entering formal coalition talks. anna: they may be disappointed in how they have been treated by the coalition, or by the electorate, in the wake of the previous coalition. but what is the alternative, what is the alternative for german politics? they tried the jamaican coalition, now trying a rerun of the last coalition, the alternative is what, go back to
9:16 am
the polls? patrick: a snap election would be unprecedented in germany. there has never been a german government or a western government that was unable to form a coalition, so that would be a very big deal. that is the other factor that is holding the social democrats together for now, at least the sense of responsibility that they need to step in and no matter what, despite the losses from the past, form a new government with angela merkel. anna: it seems to be a lengthy process. you mentioned the conference taking place next weekend, give us a run through of the time, what we can expect and win on this development? patrick: it is all incremental. if this social democratic party conference endorses the deal, all that means is that it will now go into official coalition
9:17 am
talks, which could take another few weeks. at the end of that, when you have the blueprint laid out for the agenda over the next four years, or however long it will be, then that will be put through a social democratic membership vote, a process that could take another few weeks, that is why people are talking about easter. anna: thank you very much. patrick from berlin with the latest on the political scene. still with us in london kit , juckes, global head of fx strategy at societe generale. what is the risk here, because we saw moves higher in the euro despite people saying that the coalition negotiations, the big market mover, that you might have thought it would be. we saw the euro react on friday, is there risk of unwinding if things do not move ahead? kit: some of it, we have been a long way on the news. becauseme hold back, everything i know says that the
9:18 am
market is bullish of euros, as much as on dollars from last year. but off we go on good news for politics, so it feels like good news is pushing against the open door, and bad news on the shut one. i think you will only get modest replacements. go back to last june when they started talking about tapering, the euro-dollar went up to 1.17, and we traded at 1.21, then we got stuck between 1.16 and 1.21 for the fourth quarter, so i think we need to find the equivalent level, and then we will pull back and maybe get to mess around in the 1.21 area for a number of months. anna: what do you expect from the ecb? i read a number of pieces over the weekend that suggested that some strategists think they have moved to quickly. this is a chart, the s&p 500 to
9:19 am
show what we are doing at the same time on stocks, but this goes back a couple of years. you can pull it up. it shows we are spiking higher on the short rates, here in europe, so there is a lot of expectation around the ecb. kit: i would love them to raise rates this year in the sense of where the economy has seen some sense on it. i think there is a limited chance that they will do it if the euro goes on rising. anna: because the market still says 2019 for a rate hike. kit: thinking about the end of 2018, it is moving, but i will do back to my point about the u.s., which is not about the data on the first hike or the first couple, it is when people say, when are the european rates -- once we are moving, where we going to? and i think that is a
9:20 am
conversation people have not had for a very long time. anna: even if growth is doing well and we talk about the euro bill, we have this -- boom, we have the survey lifting estimates for 2018. if inflation will not be at target, it does not change the style of too much, it sounds to me is what you are saying. group can talk down the hawkish group and to say wait, but when it gets there we are on a journey somewhere else. if you have seen the oil price recently or the negotiations with a tall, if that is the story we are getting we are probably sending out more things to look for the dip, w hich is useless for making money and we will end of the year -- anna: thank you very much.
9:21 am
kit staying with us. still ahead, the concession group in the u.k. says it will enter compulsory liquidation. in the business that survive -- that supplies the means of central government services. we will bring in the latest on the carillion story. this is bloomberg. ♪
9:22 am
9:23 am
anna: this is "bloomberg markets." i'm anna edwards. public holiday in the united states, so we are broadcasting from london today but let's -- t oday. carillion collapses under debt, crushing the major creditors, including barclays. at least impacting them. the banks are getting hit in most after the company found for liquidation. joining us with more is our
9:24 am
gadfly commonest. good to have you -- calmness. good to have you. for the global audience have maybe not follow this company, what has led to this final collapse of this business? a company in construction where the business and politics mix, so essentially you have a government trying to get people to build hospitals and stadiums, and companies with these contracts, but i think what has happened is runaway aggressive growth, who will give the government the best price, essentially with some much growth and it's a little money to show for it the company ended up collapsing. anna: you made the point in your piece on this, on the bloomberg, that this is a fragmented industry and therefore some of the margins being made by the companies in the industry our local compared to those in other parts of europe. lionel: my view is that we should not frame it into public or private, should this be
9:25 am
public dominated, or privatized companies, but is the market run well? does the government know what it is getting into. did into the financial health of the company? anna: that is something that will be investigated after this. it came with profit warnings in 2017. in the end, the debt load was too large for the business to withstand, that is the story today, that they failed to find an agreement with the government to achieve any kind of bailout. a bailout was not really in the cards, was it? no, but i- lionel: want to be clear that this was not a private company, it was doing work for the government, so there will be questions asked of the government of how much it new and how responsibly it was awarding the contracts. anna: given the stick of the opposition, given the arguments at the opposition is making on whether we should outsource to
9:26 am
the private sector, what was previously public-sector fraction knowledge a, that that will come up -- functionality, that that will come up, whether they should be doing these things? yet ifi'm not sure they will change direction. i cannot see the u.k. changing their whole history and doing all of this stuff in-house and in the government, i think they need more attention on whether it is done well. anna: nothing planned at the moment, but we will see. thank you very much. lionel with thoughts on the collapse ofcarillion. still ahead, we talk about the state of brexit and the fate of a crucial do. -- deal. this is bloomberg. ♪
9:27 am
9:28 am
9:29 am
anna: live from bloomberg's european headquarters in london, i am anna edwards.
9:30 am
you can see some blue skies creeping through in london. let's check out the market action for you. the stoxx 600 regaining a little bit of ground since an hour or so ago. martin luther king jr. day in the united states takes some volume out. the dollar is on the back foot against most of the major currencies. nymex up a little bit, this morning. we have had some reaction from opec, members of suggesting they are not looking to change track on production cuts. let's check in on the "first word news." here is emma chandra. emma: president trump told reporters he is the least racist person they have ever interviewed. the president was in palm beach, florida reacting to fallout from the vulgar comment about immigrants run haiti and africa. he has denied making those comments. in florida, one person has died
9:31 am
and 14 others injured on a casino shuttle boat that caught fire. flames caused passengers and crew to jump off. investigators are trying to figure out the cause of the fire. china is stepping up its crackdown on cryptocurrency trading. the government is targeting online platforms and mobile apps that offer exchange like services. rockedling clampdown has online markets of bitcoin and other digital currencies over the past few months. the world's largest diamond has been found in africa. it was found in a diamond mind inlesotho -- mine disinvesting lesotho -- in lesotho. global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. anna: i'm sure that diamond
9:32 am
looks impressive. we need a ruler or the golf balls that it is bigger than. one of the big questions facing brexit negotiators is financial services. it would not allow the u.k. financial sector free access to the eu markets. we spoke about the company's hopes for negotiations and how they are preparing. >> what they are hoping to do is that by the end of the first quarter of this year, actually some idea of what that transition will look like. we are still full steam ahead for opening up in brussels. about 2 billion euros of business for us. we are going full steam ahead and this is going to be a hard
9:33 am
brexit so we will be up and running by the first of january, 2019. when you announced you were going to open up in brussels, you talked about maybe the tens but it will pretty much depend on how the financial services part of the agreement, how is that going? with free trade agreement is that financial services tend not to be included. we will have to see where financial services comes within. there might be some sort of financial services solution. europe benefits if london is a strong financial center and that is why we are hoping there will be some resolution to keeping london's importance as part of the europeans. >> there has been a lot of chatter and uncertainty about
9:34 am
whether there would be a second referendum. is that something you think is feasible? >> it is difficult to tell what is going on in the u.k., in terms of people's views. we said it was going to be detrimental to our business model and there are some positives to counteract that. i don't think at the moment, there is going to be any second referendum. the government is already down the path of negotiating. the outcome will be really important for the strength of the u.k. economy going forward. >> are you getting any indication that eu officials will give some wiggle room on financial services given the fact that others like brussels and frankfurt are vying for your business? >> one thing is certain.
9:35 am
there is no one key financial sector -- center coming up in the talks apart from london. there is nothing particularly in germany. you were going to have a complete fragmented financial services sector if we are not careful across europe. that is one of the worries for all of us. the more fragmented it is, the more europe loses as a whole. where hopeful there will be some special environment that can make -- that can accommodate financial services. real -- inga bea fears ofng about her brexit. what in terms is moving the pound at the moment because
9:36 am
hanging on the hard to soft issue? up: the euro is going then thehe dollar and second thing that is happening i bearish that barris -- is just getting pummeled in the ground by the lack of any fresh bad news to sustain it. it is keeping up with the euro, pretty much. anna: just moving up on the coattails of the euro does not the most sustainable reason to buy currency. is that a risk? kit: it is a risk if it starts going just keeps going on but there is a stern mind reality.
9:37 am
rbs was bought by the government and bailed out in 2008. i don't think this is as bad or shocking as either of those events. it certainly isn't, yet because nothing has happened. anna: this chart shows exactly that, it shows some of the more recent moves in the pound and , seeing back up again brexit kind of level that you may see on the left hand -- left-hand side of the chart. where do we had from the pound? thinking about the bank of england. kit: as the euro rises, we will continue to get support against the dollar and you are more likely to see trading against the dollar and i think it is because euro is going to go up.
9:38 am
its ability to keep up with the strength and the euro when the u.k. economy is not accelerating, it has slowed down. anna: why does it make sense on the back of the euro? it that the market is excited about? kit: the u.k.'s biggest trading partners are with europe. if the euro is doing well in the dollar is doing badly, the pound is going to do well against the dollar. in aggregate terms, it is a lot weaker than it was in 2016. think about where the euro was trading in the middle of 2016. that is a long way higher and we have not kept up with it since then. 2018 andwe had through we get more details on what a trading relationship is going to look like, how does the bank of
9:39 am
england navigate that? kit: i think they will sit on their hands. i am nervous that with the price of oil where it is and with the the moment,te at there is a chance that they will get pushed into another rate rise. that might mean the economy was continuing to do better. i think that is the wrong outcome overall. i think the right outcome is to keep monetary policy accommodative and hopefully that drags the euro a little weaker against the pound of the euro rises. oft gives us a slight bit competitive health against our biggest trading partner. .othing wrong with that anna: a little hope priced in. it, overthe heart of the weekend, there was a lot of news flow around the irish
9:40 am
border. what is the staging post for us to watch out for? kit: we have to plan how long the transition deal is because to go on, us a period getting negotiations. and what can be done, you still a lot it is hard to avoid of wishful thinking about the british hopes about what kind of deal might be done. anna: with any negotiation, both sides going in thinking wishfully. kit: and the rest of us look at them and think don't anybody cut off their leg just to please their face or anything worse than that. we hope that we get a good deal but you cannot avoid the effect that the upi economy has gone from the top of the g7 growth
9:41 am
pile to the bottom and it probably stays there. kes,k's -- kit juc chief fx shortages at societe generale. if -- a fascinating conversation to be had. we will talk electric vehicles and autonomous driving, next. ♪
9:42 am
9:43 am
9:44 am
anna: live from london, i am and the edwards -- anna edwards. we do get an auto show taking place. the world's biggest carmakers are gathered in did -- in detroit for the annual event. david westin caught up with the ford ceo, jim hackett. iterative by asking if -- he started by asking if ford would get out of certain geographical areas. jim: we have to play to win. if we are not winning, then we should be exiting, but right now, the opportunity is in the categories that have to do with enterprise systems. we have 89 facilities around the world. enormous use of capital.
9:45 am
using 3-d printing to speed up cycle times, we can change by using information the way we pose and cause the flow with our suppliers. otherexperiences in industries were things move faster, so those are kinds of things that i want to take on an watching amazon transform its business has taught us all a lesson, that there is more efficiency there. david: can you hit -- give us any sort of timeline on when you will hit a tipping point on av and ev? jim: i quote bill gates who says he really overestimate the arrival and underestimate the impact. i really believe that. i think the impact is like once-in-a-lifetime history. bill and i talked when i took the job. this is the most important thing that has happened in the last --
9:46 am
years. the integration of this capability in this -- in the design of vehicles coupled with a smarter world. maybe it did not seem like a kind of thing that would come from a auto manufacturer, but the nature of edge computing is evolving so fast that the vehicles have to coupled with them in ways to do things like this. you waste more fuel try to find a parking spot then you do sitting at a traffic jam. there is no reason for that if the vehicle is smart enough and the parking spot can paying that parking spot can ping that it is available. will a child born this year have to learn to drive in 2084?
9:47 am
jim: -- 2034? jim: i think they will have the perfect option because the drive would be a world of passion -- where the passion for these vehicles never ends, but they can have the option of delegating tasks to that vehicle that the grandfather never expected, including never crashing. anna: the ceo of ford their. joining -- there. joining us live from the international auto show is david westin. what is interesting is his take on whether young people have to learn to drive. getting some really fascinating answers. a couple suggesting they might not actually need to, but they might choose to. you would expect that in detroit, people thinking that people will want to drive. the one thing we hear repeatedly is that this is going to be bigger than we think.
9:48 am
it may take longer but it is bigger than people think. jim hackett is actually not a car guy. you hear him referring to amazon and bill gates. it is a very different approach. anna: seeking his inspiration outside of the sector. you are there on the ground and we talk about ev and av, often in the same sentence. they are not the same conversation. which is most newsworthy in detroit? david: i would say there is more talk that i have heard about autonomous vehicles. it is about the way the cars will talk to one another and talk to cities and the way they will transform this so-called driverless car. thate hearing more about than fuel cells. anna: on the subject of the
9:49 am
powertrain and which type of energy these cars are going to use, we have heard from some companies about investments in electric vehicles. behind you companies , are they behind the curve and are they all following work has lie has been before, or are they at the forefront? -- work has lie -- all following has been lie -- tesla before, or are they at the forefront? david: they don't have the same vehicle miles of experience, so they would say if you ask them and they were honest, they would say it is all fine and good what tesla is doing, but they are doing something much larger and broader and more transformative. anna: david westin joining us from detroit.
9:50 am
coming up, president trump returns to d.c. after a three-day weekend at his mar-a-lago resort. this is bloomberg. ♪
9:51 am
9:52 am
anna: live from london, i am and at -- anna edwards. time for a bloomberg business flash. here is emma chandra. the next few weeks will prove crucial in deciding whether waiver century fox will be able to buy british tv company sky. provisional findings are set to be set. a final deadline is scheduled for the start of march. ceo is counting
9:53 am
on the jeep brand. he says the company can double profits in the next three years by exploiting jeep potential. said that the u.s. tax cuts could produce -- boost profits by $1 billion per year. sachs stanley and goldman -- according to a person with knowledge of the matter, the chinese smartphone maker has chosen credit suisse and deutsche bank to work on the ipo. no word yet on when it will be lifted. -- on when shares will be lifted. funding runs out for the united states federal government by friday. that gives lawmakers for legislative days to reach a deal to avoid a government shutdown. for more on what is ahead in washington, shannon pettypiece joins us from mar-a-lago. the government shutdown is
9:54 am
clearly the big item on the agenda. run us through what is in the mix. is the can to be kicked further down the road? shannon: there does not seem to be appetite on either side for a government shutdown. some colleagues of mine on the hill say they don't necessarily get that same vibe, that same sense of tension they have gotten during past ones. it is still a difficult needle to thread, to get to a deal. big issues here is democrats wanting to get some resolution for these immigrants who are brought here as children to give them some sort of legal protections. they do not want to make the concessions that republicans want to see made. it is a possibility that could be left out of this funding deal , butut off until march
9:55 am
that is something democrats have not wanted to see. anna: do we have to get a deal around daca to enable a shutdown to be avoided? president trump tweeting over the weekend that he does not think the democrats want to make a deal. they talk about a deal but they don't want to help. others in the gop have been more hopeful about whether any progress on daca is possible. shannon: certainly in order to reach an agreement to fund the government, the daca does not have to be a part of it. the deadline is actually in march. that could be moved to march. the democrats could make a concession to keep working on something but the bipartisan effort seems to have broken down with those comments you mentioned from the president and tweets. they have quickly moved to blaming democrats for not wanting to get a deal.
9:56 am
we really only have a week, maybe two weeks where there were serious bipartisan discussions going on. that does seem to have broken down and it is hard to tell it that is just a posturing move. how do you get democrats back at the table? it is questionable because the democrats do not have much incentive to do a deal with republicans. anna: thank you very much, shannon pettypiece joining us from mar-a-lago. we are looking at the european equity markets. it has turned itself around. coming up in the next hour, david westin interviews toyota. they will talk more about cars in the next hour. ♪
9:57 am
9:58 am
9:59 am
mark: live from london, i mark barton. welcome to "bloomberg markets."
10:00 am
mark: here at the top stories we're covering from the bloomberg and around the world ., european stocks start on a slightly lower note. we will check on the outlook for the euro and whether it will continue to sap any long-term momentum for equities. the next stage of brexit negotiations is expected to start by the end of the month. madel enough progress be for sterling to stay at the highest level? the superjumbo airliner -- we look into the chances that emirates airlines can save the once heralded jet. close ofs until the trading here in london, have a look at what is happening in equities, falling for a second day in three. becauseding in the u.s.
10:01 am
of the martin luther king day holiday. small game for the cap 40. the best run since november the third. the stoxx 600 below that record. global stocks go from strength to strength. the msci index rising to a new record today. it jumped by 24% in the last year. let's get to the currency board and see what's happening to the euro and the pound. the euro goes from strength to , thegth up by 1.5% today highest level since the end of 2014 after the biggest weekly jump last week since september. 1.4 percent, buoyed by the prospect of a new german government. the ecb open to tweaking its policy guidance.
10:02 am
the pound rising against the dollar. 1.38 is where we are. the highest since june 23, 2016. you know what happened on that day after gaining for four straight weeks? the key data this week's cpi data tomorrow and retail sales on friday. the eu withdrawal bill returns for debate in the lower chamber on tuesday. emma ross thomas will tell us all about that in just a second. in the bond market, we have a slight decline in the u.s. tenured to the -- 10 year today. the german ten-year is unchanged at 50 a spac 58 basis points. the italian 10 year is up at 2%. weeks fallen for two after closing up 0.29% ungenerous second. on january 2.
10:03 am
emma: carillion has filed for liquidation. the company has struggled with debt and the shares have fallen since july. it works on government projects ranging from hospitals to the high-speed rail lines. the feud between persian gulf monarchies has escalated. the uae sent fighter jets from koetter and intercepted two of its jetliners from flights to moderate. qatar denies it took place. qatar denies allegations that it supports terrorism. officials areeral investigating that false alarm about a missile attack. hawaiian residents were sent into a panic when the mobile alert set a ballistic missile was inbound and people should take shelter.
10:04 am
hawaii's governor said a state employee pushed the wrong button. president trump told reporters he is the least racist person they have ever interviewed. the president was in palm beach, florida reacting to fallout from the vulgar comments about immigrants from haiti in africa. he has denied making the remarks. global news 20 for hours a day powered by 2700 journalists and analysts in more than 120 countries, i'm emma chandra. this is bloomberg. mark: theresa may's brexit bill returning to parliament and tories battling the bill. this comes as the first signs of disagreement emerge among the eu. let's bring in emma ross thomas, bloomberg's brexit editor. good morning on this blue monday. is it going to be a smooth process for the eu withdrawal bill through the comments? we will get to the lords in the second. who caused thes
10:05 am
government defeat at the end of last year that they are not planning to cause trouble again this week. that is tomorrow and wednesday, but we do expect in the lords that the bill will come under huge amount of scrutiny. there will be a real battle . they made quite clear that there will be a fight. mark: and it will be a battle for more parties. there are tories in the house of lords that are categorically against brexit. sturgeon andcola jeremy corbyn? will they put up a fight this week? emma: they both said they are not happy with the bill as it is. the corbyn position is an nteresting one because nicola sturgeon has been sent to that he's been calling on the labour party to say that the case should stay in the single market after brexit.
10:06 am
jeremy corbyn is resisting this and it said it would be possible to stay in the single market after the eu. norway is not a member of the eu and is in the single market. he has made his position quite clear. that his party is hoping that labor will lead the charge for the softest of all brexits with the eu remaining in the single market. mark: sturgeon does not seem to be budging on the front that she doesn't believe that the stage that up in scotland they will actually approve the final bill when it's drafted down the road . how much of a problem is that? it's not binding is it? emma: not binding. there will be several occasions this year where we will be talking about constitutional crises and setting precedents if you like. mark: are there amendments that may can propose that will
10:07 am
appease all parties? is it going to be tricky? emma: sheila just am a single market. -- she will just a in the single market. mark: and the lord's? emma: that will be a very interesting debate and a three-way one. it's early to get down to the nitty-gritty of the amendments come about what's clear is again there will be a constitutional crises in the lords. they don't tend to block stuff that has been in the manifesto. however, it's a minority government and so the rules of not blocking things when you have a minority government are quite so clear. mark: let's talk about the uk's eu relationship. is there a flicker of light i see on the prospects of financial services being included in the trade? is the eu unity slowly coming apart? emma: bloomberg survey of the 27
10:08 am
governments and we ask them a series of questions. one of the questions was about financial services. luxembourg's prime minister said we need to get away from binary thinking and show pragmatism. i think those are words that sort of fill the u.k. ministers hearts with joy because that's the kind of thing they are advocating for. certainly within the eu 27 there are clearly divergent national interests. in public they are all very keen to say that they are all united behind barnier. it's undeniable that all those countries have diverging national interests. we sought last week as well with the netherlands and spain. this sort of agreed that they would like a soft brexit to keep the u.k. close. as the months go on, we will be seeing more of this. the question remains whether they will put the eu before
10:09 am
their own national interests. mark: ultimately they have to agree, don't do a they as one? emma: if you want a deal by october, then you could argue that the uk's interest is that you have a united eu. mark: the best we can hope for in the near term is a transition deal. emma: bk government said transition talks would not start until the end of january. we were hoping for something a bit sooner and that leaves two months to really hash out a transition arrangements. that will be an interesting debate. while there's a lot of will on both sides for that to be inducted so businesses can bank on that, there are a few sort of wrinkles. the eu has said basically the u.k. has to adopt all the rules and the whole status quo, but not have a voice or a vote. that is going to be tricky with
10:10 am
some parts of the tory party, this vassal state rhetoric. essentially what the eu is proposing for the transition is very much a vassal state for the u.k. theresa may has said that we will leave the eu on march 2019 and it's not really going to feel like the u.k. has left. mark: which might not go down well in all quarters. anna ross thomas, bloomberg's brexit editor. en with his seven key calls for 2018 next. this is bloomberg. ♪
10:11 am
10:12 am
10:13 am
mark: live from london, i am mark barton. this is "bloomberg markets." the sliding dollar continues to be the biggest story today. weakening against him us every currency. european stocks falling at today's trading. alain, thank you very much for joining us. we will go through all seven, but let's start with the european ones. in the next session, we will look at the u.s. once. the big call is the dollar. the flip side of that is the euro. let's start with that. as the dollar falls to its lowest level since early 2015, do you think it has further to fall? alain: yes, i do.
10:14 am
this tax reform in the u.s. to my indication, what is known is priced in. the u.s. is a very late cycle economy. we are entering the 10th year of forth and the one screaming inflation may be very disappointed by this. we are heading for the end of the cycle so i'm not say we are on the eve of a recession, but it's a very clear economic cycle with the emerging cycle has restarted last year. when you are in the middle of a going away from inflation, so the speed of growth, let's say the u.s. is on track for doing half but no more, but other economies are accelerating, so the speed of growth is not in favor of the u.s. dollar. mark: the flip side of that is
10:15 am
the euro. we will focus on the eurozone and the u.k. in this section. what does that mean for the euros prospects as it touches its highest level since december 2014 today? we had suggestions from the ecb that they could tweak their policy guidance. we had better news of the prospect of forming a german government. what is left in this recent euro rally? then: the european side of going coalition, which is steady climb, is good for growth. for government last year that had 30 billion of fiscal service, so that's good news for the rest of europe and the euro
10:16 am
because it foresees the european a fasterank to exhibit pace away from super loose policy. mark: that means september is a hard stop. is it a full stop or is there a tapering process? alain: from the previous guidance we have, it's friday. we have probably moved at a faster pace. the faster you go, it will be harder and mario draghi is not hard in the way he implements, but it opens the door for earlier than expectations on the ratesuper the super loose policies. faster than previous expectations, one of the expectations was that you open the door for the following steps.
10:17 am
equal, thisg being is bullish. you look which, when at the valuation drivers where the currency markets are value driven, the most expensive currency remains the u.s. dollar in spite of last year's fall. the euro cannot be saved a against the u.s. dollar to be expensive yet. around 1.30.e are mark: the ecb might raise its eyebrows. does that temper once enthusiasm for european stocks with the euro at 1.30? uncertaintyes add at the euro stock 1.50 level. these are very sensitive to the euro level at the currency level . if you have other strategies to buy european stocks which are
10:18 am
backed by a better earnings going to so if you're financials with rate hikes, that would be very good for the. m. if you go on structural reforms with what is happening with france currently, you have a few angles. you have the consumer sector and the construction sector, which is doing better. you have different angles which are not the euro stock 50 level. there is some dramatic investment that could come if the orders up. mark: back in a second. we are going to parse through more of his calls next. from london, this is bloomberg. ♪
10:19 am
10:20 am
mark: this is "bloomberg
10:21 am
markets." i am mark barton. time for the bloomberg business flash. airbus is publicly question relating the future of its a 380 superjumbo. john leahy says the plane risks being shut down if they cannot get a crucial order from emirates. emirates is the only airline with enough capacity to take enough to keep the program alive. more coming up later this hour. ford says it's all in on electric cars. the detroit auto show says it would more than double spending on electrified vehicles. the couple he plans to shell out $11 billion, bringing 40 models to market by 2022. shares of softbank rose after the company says it's considering an ipo for the mobilephone unit. in offering could bring -- in offering could bring $18
10:22 am
billion. the softbank founder son has been looking to unlock the company's value to boost share price. let's turn back to markets. we started on the dollar and looked at the european equities. let's go back to the u.s. you reduced u.s. equities further and you are reallocating into 10 year treasuries. equities have been very expensive and have been for a while. that doesn't mean they won't fall, but there is no check of attractiveness anymore. they're pricing tax reform. for us, that's not an infinite trend in need to look against the rates. it's one of the lowest ever we have seen on u.s. equities. u.s.annot say anymore that
10:23 am
equities are cheap because bond yields are left. u.s. is super extensive. in that sense, we are going away from u.s. corporate assets not only equities but corporate bonds and to reallocate these outside the u.s. whether that's in japan or europe. we move away from the u.s. otherwise if we were bears, we would wait u.s. mark: are we in a bear market now for the u.s. treasury market or not? alain: i don't think so. i think it's very late to be bears. the rates were 1.6% on the 10 year treasury 12 or 18 months ago. we're now closer to 3%. i don't think the u.s. treasury market is going to be one of the best in the global market this year. mark: exit strategies are gaining momentum.
10:24 am
you have said protect against global debt complacency. how do we do that? alain: you go away from super expensive corporate bonds, especially the high-yield and u.s. high-yield is not getting a good renumeration for the link cycle. you can also go away from smaller companies, especially in the u.s. again. when you screen the equity market by size, the smaller you go, the highest quantity of debt. you have already seen a factor within global markets that highly inductive companies versus good balance sheets that you have a significant reallocation. that is a second way to do it. mark: oil is another call. we've not had many dips, have we? it's been an upward move for brent, almost touching 70.
10:25 am
do you see dips from here? alain: we were expecting in december a dip so we were bullish. the buyer was perfectly justified by the acceleration of the global economy. a little bit of a boost from the u.s. tax reform, so the demand for commodities is good at a time when everything is under control by opec. we expected some kind of tactical reaction after the move we have last year, which didn't happen. mark: what if your wildcard scenarios is maybe no brexit or a soft brexit and labor comes to power. jeremy corbyn becomes prime minister. what sort of probability are you putting on that outcome?
10:26 am
alain: might be 15%-20%. it is not a zero probability for the labour party to make it. for the scenario in which we are heading for, it's more of a brexit where you apply the referendum. it's not too hard. it's a question of what you put into the brexit scenario. mark: great to see you today. head of global asset allocation at societe generale. we will be there next with bob carter. this is bloomberg. ♪ retail.
10:27 am
10:28 am
10:29 am
under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. mark: live from bloomberg's european headquarters, i am mark barton. this is bloomberg markets. let's check in with bloomberg
10:30 am
first word news. emma chandra has more. emma: president trump says he believes that democrats do not want to make a deal on young immigrants facing deportation. though cuts been pushing for a bill to over a government shutdown come about in exchange, the present wants money to build a wall the mexican border. in florida, one person has died and 14 others were injured on a casino shuttle but that caught fire. the flames caused passengers and crew to jump off the boat. in this give us tried to figure out the cause of the fire. in jakarta, 72 people were injured after a floor collapsed at lunchtime. police searched the building and found no evidence that there had been a bomb. the stock exchange started's afternoon session at the usual time. china is stepping up its crackdown on cryptocurrency trading. according to people familiar with the matter, the government
10:31 am
is targeting online platforms and mobile apps that offer exchange like services. china's rolling crackdown has rocked bitcoin and other cryptocurrencies over the past month. global news 24 hours a day powered by 2700 journalists and analysts in more than 120 countries, i'm emma chandra. this is bloomberg. mark: the north american international auto show in detroit opened this weekend and we will bring you full coverage throughout the conference. one headline already is from ford. the automaker announcing it will double spending on electrified vehicles. david westin sat down with jim hackett and explain why technology will enhance the outlook for the 115-year-old automotive company. >> where the play and how to win, really everything was on the table. we have to play to win. there markets were if we are not winning, we should be exiting.
10:32 am
right now the opportunity is in the categories that have to do with enterprise systems that support these factories. we have 89 facilities around the world, and enormous use of capital and floor space reduction possible there. using 3-d printing to speed up cycle times. we can change by using information the way we post and pause the flows with our suppliers. believe it or not, as well developed as the auto industry has gotten, i've experiences and other industry where things move faster. those are the things i want to take on. watching amazon transform its business has taught us all less of that there's more efficiency there. david: can you give any sort of timeline on when we will hit a anding point for av ev? jim: all i can do is quote bill gates where you overestimate the
10:33 am
arrival and underestimate the impact. i really believe that. i think the impact is once-in-a-lifetime history. this is the most important thing we both think in the last 80 year that the ford motor company has to address, which is the integration of this capability and the design of vehicles and coupled with the smarter world. this is what we said at ces that maybe didn't seem like the kind of thing that would come from an auto manufacture, but the nature of edge computing or the internet of things is evolving so fast that the vehicles have to couple them in ways to do something like this. you waste more fuel and trying to find a parking spot then you do sitting in a traffic jam. .here's no reason for that if the vehicle is smart enough in the parking lot campaign it's available.
10:34 am
there's no need for a meter maid because the intelligence can meter out parking fees for the vehicle. the vehicle can pay for it without the customer having to do nothing. david: a child born this year has to learn in 2034? jim: i think a child born today and 16 years later, i think they will have the perfect option, which is they can drive because it would be a world with a passion for these vehicles that bs, but they can have the option of delegating tasks to that vehicle that they grandfather never expected, including never crashing. mark: that was jim hackett with david westin from the north american international auto show in detroit. david is standing by now live from detroit and is joined by another auto executive. david? david: thanks so much. this is bob carter. welcome to bloomberg. bob: thank you for your time. david: we just heard jim hackett
10:35 am
talking about the new world of av and ev. you have exciting announcement. tell us about the avalon. bob: it's a new full-size sedan we will be introducing this spring. it's the first time it's shown publicly, but everything about the car is brand new. we introduced our all new camry with new platforms and technology. it has really hit the market very successful. ly. 43,000 of them were purchased last month and it became the number one favorite vehicle in america again for the 16th year. what the avalon is is that same technology that we put into the new camry, but we made it larger , more luxurious for the person that's really truly looking for a flagship vehicle. it's the fourth generation of avalon's that will be available later on the spring. david: why a sedan?
10:36 am
you walk around this auto show and all the talk is about trucks and suvs. there's been a general shift in the united states to buy more trucks and suvs. why sedan? bob: the market in north america has shifted from 50-50 car and truck to 65% truck to 35% sedan. these segments are still very large. the camry has a segment of andst 2 million last year as a full line manufacturer, we want to represent products to everybody whether you're interested in the suv or passenger sedan. our strategy is to keep investing into every segment of the market to give the consumer the choice and let them decide what they would like to own. david: as you said, toyotas may victim united states. at the same time, we have seen the market for vehicle start to trail off. how worried are you about it? bob: not at all.
10:37 am
we project the industry will relax somewhat. 16.8 millionting next year. there's a lot of talents right now behind the industry. 16.8 million in the market is a very good industry. gdp growth, employment, wages, consumer confidence are all pointing positive. consumer confidence is at the highest levels we've ever seen. rise and allates durable goods cycle, we believe next year will come down and little bit from 16.8, but 16.8 is still an exceptional market for north american cars. david: last year when we were here, all the talk was about nafta. since then, we have heard more aggressive talk at of the white house and the canadian government saying we get ready for pulling out. how concerned are you about nafta and how it will affect
10:38 am
your supply chain? bob: what nafta has done is made north america a global juggernaut for north american production for the automobiles. we are the core leading auto producer worldwide. nasa had a lot to do with that. since nafta was introduced, we brought in over eight new plants. we have 10 plants in the u.s. and last week announced our 11th. our employment has grown over 80%. today there is 7.2 million people in the u.s. employed directly by the auto business. unfortunately if nafta was to go away, it would rise costs and put that production capacity at risk. we are very much advocating the continuation of nafta, but we do agree that its 25 years old. there's many thing within the eight agreement that can be -- many things within the agreement that can be updated or
10:39 am
modernized that's good for consumers, workers, and the u.s. economy. david: a lot of the talk is about autonomous vehicles and electric vehicles. certainly you are pushing hard at toyota and you have an announcement with amazon. going tod born in 2018 need to learn how to drive in 2034? and we believe the fun excitement of driving a car will always be a part of the auto industry. we are in an unusual situation. we sell consumer products that people get emotionally attached to. as society changes in our urban areas get more dense, we believe autonomy and mobility as a service will be one of the largest trends emerging in the u.s. and we are investing in that area and we are happy to partner with some very large corporations that will first start in the commercial end of the business but then migrate to private ownership. david: bob carter, great to talk to you. bob: my pleasure. thank you for your time. david: sending it back to you.
10:40 am
mark: david westin there at the detroit auto show. from cars to planes in the future of the airbus a3 80, could it be shut down? we will hear from john leakey on who could save the jumbo jet. this is bloomberg. ♪
10:41 am
10:42 am
mark: live from london, i mark barton.
10:43 am
airbus has seen its stock fall the last year. airbus is publicly questioning the future of the a3 80. its flagship aircraft risks being shut down if the manufacturer fails to limit crucial order from the emirates. guy johnson spoke with the airbus head of sales about the situation. john: i believe that we can find a solution with emirates and hopefully the not-too-distant future. a strong base that only a bit operator like emirates can provide giving us something like six airplanes a year for about the next 10 years or so, which gives you a base to sell two or three more on top of that until the market turns around. , every 15this morning years this industry doubles in size. you're not going to get double the number of flights into heathrow or jfk or hong kong.
10:44 am
we have an airplane that passengers love to fly in. that combination means we are theg to be selling a380s in middle of next decade, but we have to get from here to there/ . guy: will the line be profitable at six a year? john: that's our goal. it depends on the price you are charging for the airplane, too, but that's our goal to try to find a way to get it out so we are at least at break even if not a prophet at the lowest possible number. it looks like that number is between six and eight right now. that is what we are working on. guy: what are your bigges -- one of your biggest successes was persuading the board to put new edges on the line. again talking this morning about a lift in that line to more than 800. how feasible is it to make that work? john: we are already on target
10:45 am
by 2019. 60 a month i don't think we should stop there, but again that's not my decision to take. that would be the board and others in manufacturing. there's clearly demand for the product. we are selling 60% of all the single aircraft in the world right now and that means there is some frustrated demand out there that we need to fill. guy: john, just on that, do you think that we could see a new version of the 320 one steve lombardi a deal is done -- once the bum barnier deal is done? john: i don't at all. we think they have a nice airplane for the bottom end of the market. there's a little bit that we could pick up and there's things that they could emigrate from us to make the aircraft more common, but the idea that we would somehow be dropping embers of our family and substituting
10:46 am
c-series does not make any sense to me. johnson discussing it with john leakey. katz.g us now is ben ben: john coming out and saying that if emirates does not come out with a deal that we will close the line. that's pretty directed the defense of other emirates will respond to this coul. mark: this is not the first time the plane's future has been in doubt. ben: there was potential that they may need to set it -- shut it down because of slow sales and it's been rocky ever since. what happened was is that we were expecting a multibillion-dollar deal for 36 planes that would've really sustained the production line. that didn't happen. mark: why didn't that happen? wouldt happen, this be the next big thing that we will be talking for a long time.
10:47 am
why did it never fulfill its promise when she said passengers love it? ben: that is something we can't really dispute. there are fansites dedicated to this airbus. come you'reemirates talking about capacity and a huge commitment here. they are nervous to invest in a plane that they are not sure themselves will be around. there's a question on whether the engine makers want to get involved again on a program that may not have a lifespan. it's that kind of negotiation that we are looking at here. mark: single aisle? ben: single i was doing fantastic. they signed it for $50 billion in its 430 planes. single aisle is where airbus has been very strong. the market is really going point-to-point and much more shorter trips. that is where the low-cost really is in demand.
10:48 am
that means the wide-body market is stuttering a little bit. mark: still ahead, the price of good taste. how one former investment baker turn taster is upending the wind industry. that's next. this is bloomberg could . ♪
10:49 am
10:50 am
mark: live from london, i mark barton. this is "bloomberg markets." 's former wine critic protege has struck out on his own. he is looking to transform the industry with new technology. he also plans to take on his old boss. erik schatzker reports. ♪ is a $300 billion global industry where one person's opinion to make fortunes or break them. that is because of this man,
10:51 am
robert parker, and his newsletter. for three decades, he dominated the world's most influential wine critic. now parker's protege is building an empire of his own. antonio runs this. what are you trying to build? inwe started with the idea 2013 of building a world-class platform. 250,000a database of professionally written reviews. we have 7 million user reviews . we also have a partnership with whole foods and several of the partnerships we can't announced just yet. what we have together is something that no other company can come close to. erik: you think of yourself as the next parker? >> not at all. erik: why? >> steve jobs said you cannot live your life as anyone else. i never wanted to be a
10:52 am
replica of someone else because a replica can never be as good as the original. bob is a genius, fantastic, one-of-a-kind. we're going to be something different and i've no desire to be a version of somebody else . erik: different in what way ? 8 antonioantonio: every decision i've made is completely antithetic to what bob did. that is something we never had a parker. our benefits are world-class and everything that we have done is completely different from that model . when the most experienced active wine critic in america wants to work with us, that says something. when the best cartographer of the vineyards wants to work with us, that says something. when neil martin, a superstar wine critic with enormous experience, wants to be a part of. our team, that says something -- wants to be a part of our team,
10:53 am
that says something. erik: you make it sound like the advocate was a disastrous company. antonio: no, because bob parker was like a mentor to me. can: can anyone's palate dominate the wine criticism business the way parkers did and should anyone's palate dominate the way that his did? antonio: i think the world is very different today. it's a totally different world. it's probably not healthy to have a simple person dominating. erik: it's not even wine criticism. it's the wine industry. antonio: it's not the healthiest thing in the world, but they're such an opportunity right now with social media and technology to reach a massive number of people that a think it's possible that one or two people actually have more influence than bob parker did. this goes back to your first question. not trying to be a version of somebody else. you see this in sports all the time. nobody will ever be this record
10:54 am
and then somebody comes along. tennis -- like pete sampras, no one's ever going to beat that. you have two guys and one is knocking on the door. erik: your former investment banker. how does that inform and influence what you are doing and what you have done? julie my generation has had to do with a lot more challenges and that is why we are more poised for the future. my first job was long-term capital the tech bubble melted down. there was the mutual fund trading scam. that was all within five or six years and these are the things i had to deal with as a young executive. my young peers 20 years older did not know how to manage and crisis. they had only seen black monday. that people of my generation were younger and had to do with a lot more crises. i think that's actually good for learning how to cope with challenges in business. erik: from the outside, it kind of looks like you are trying to
10:55 am
demolish the house that parker built. you left the wine advocate . emerged with one of his chief rivals and you just hired a successor in the martin, so are you? antonio: all the best people want to work in our company and that's really what we strive to create starting in 2013. we wanted to crate a world-class company that would attract the best in class talent and not just on the content side, the technology side, the digital side. our office and every level, we only hire superstars. we are looking for the superstars. mark: erik schatzker there with antonia. o. coming up is the european close. no trading in the u.s. today because of the martin luther king jr. holiday. the stoxx 600 is lower marginally as is the ftse. the dax has a small game. we're down for the second day in three after rising. the best run since november the
10:56 am
third. this is bloomberg. ♪
10:57 am
10:58 am
10:59 am
♪ 30 minutes after the trading day in europe today, from the european headquarters, i mark barton, this is "the european close" on bloomberg
11:00 am
markets. ♪ mark: right here, the top stores where covering around the world. flush withuctions, government contracts goes belly up. how many spillover effects are there? what will it take to get a bear market going in bonds? janet henderson says the chances of a bear market on looking too likely. hitting the road to detroit for the annual auto show, inside the books with bayerische motoren werke ag. have a look at what is happening with european equities. 30 minutes away from the end of the session.


info Stream Only

Uploaded by TV Archive on